Fuel for the Corn Bulls

Consider the following and the effects on the U.S. corn crop: Ongoing weather headlines (which have taken some of the extreme heat back out of the forecast); thoughts of fewer corn acres in the U.S.; further yield reductions possible in the U.S.; increasing global production (6-7%); increasing export competition from Ukraine ($20-30/ton cheaper), Brazil (second crop corn $5-10 cheaper than U.S. new-crop); Argentine corn being approved and delivered for the first time to China; both Argentine and Brazil corn some $35-45/ton cheaper than U.S. corn.

In simple terms U.S. "production" is going to be highly debated for the next several weeks. As of right now we have the USDA estimating the crop at 14.005 billion; Informa is now higher at 14.078 billion and Lanworth is substantially lower at 13.68 billion bushels using a 156.7 yield. Bottom line: No one seems to be able to get a handle on the acres. Sure, we might see 1 million acres in Iowa go unplanted, but there is talk there might ultimately be another 1 million acres lost due to weather damage. The only thing certain is that no one is certain, hence the market finds itself frantically searching.

As for demand, I continue to be concerned about both Brazil and Ukraine coming online with cheaper supplies. I am also concerned about how long the ethanol industry can continue to keep the bids in old-crop supported. Follow my daily report to find out what the USDA's next move will be.